While it is possible for hospitals to become more efficient under PPS without lowering the quality of care at all, it is also possible for hospitals to maximize revenues in ways that compromise the care provided. Because the PPS is new and still being phased in, we do not know which strategies will be used by various types of hospitals. Therefore such changes must be monitored carefully. The purpose of this paper is to propose a method for monitoring the effects of PPS on the way short-term general hospitals are behaving toward psychiatric patients. In particular, are nongovernmental hospitals - . "skimming," following the introduction of PPS, by treating more psychiatric and substance abuse patients in the most profitable DRGs? . "dumping," following the introduction of PPS, by transferring out or not admitting psychiatric and substance abuse patients who are unprofitable? . readmitting these types of patients more frequently after PPS than before PPS? A methodology is proposed to address these issues by 1. Identifying which psychiatric and substance abuse inpatients are profitable, and which are not. 2. Evaluating trends from 1980-1985, to determine if, following the introduction of PPS, nongovernmental hospitals are admitting more of the profitable cases, and fewer of the unprofitable ones ("skimming") or transferring out certain undesirable" patients more frequently ("dumping"). 3. Evaluating trends in readmissions from 1980-1985, to see if there are increases in readmissions for psychiatric and substance abuse patients following the introduction of PPS.